The latest Global Economic Conditions Survey (GECS) from ACCA (the Association of Chartered Certified Accountants) and IMA® (Institute of Management Accountants) released today has revealed confidence fell in the third quarter of 2018, its lowest since the beginning of 2016. News flow about trade tensions has greatly impacted on confidence within the world’s biggest economies – the US and China.
ACCA’s head of business insights, Narayanan Vaidyanathan, says: ‘The world economy this year is on course for its strongest performance in seven years, boosted by a buoyant US. Momentum going into 2019 will be positive but there are headwinds that will slow the pace of expansion as the year progresses. In the US the boost from tax cuts will fade and interest rates are likely to continue their gradual rise.
‘In China, growth is slowing down mainly as a result of recent monetary policy tightening introduced to slow credit growth. But the authorities may ease policy to support growth if trade tensions with the US escalate early next year. Policymakers appear to be finally recognizing recent rates of credit growth are unsustainable and a period of weaker economic growth is a price worth paying for a more secure financial system.
‘Prospects for the Eurozone remain positive; falling unemployment levels in many Eurozone countries is leading to higher wages, which is helping to support consumer spending., Meanwhile in the UK the economy is holding up well but Brexit uncertainty is extreme with less than six months before the due date for leaving the EU.’
Raef Lawson, Ph.D., CMA, CSCA, CPA, IMA vice president of research and policy, says: ‘Ten years after the collapse of Lehman Brothers, which marked the start of the deepest global downturn since the great depression, the risk of something similar occurring in the near future appears low.
‘There has been a sharp reduction in the amount of risky lending, including the sub-prime mortgages that triggered the crisis 10 years ago. The Dodd-Frank Act in the US and the creation of the Prudential Regulation Authority in the UK, as well as the Basel III regulations that require banks to hold more capital, have made banking sectors across the developed world much safer. And while there are worries about property prices rising too quickly in some countries, these concerns are mostly focused on relatively small economies such as Hong Kong and Australia.’
GECS is the largest regular economic survey of accountants around the world, in terms of both the number of respondents and the range of economic variables it monitors. The report can be found on ACCA’s website.